What do success fees pay for?

The other day I posted a somewhat tongue-in-cheek comment about how the need for success fees could be avoided if claimant lawyers stopped bringing bad claims. However, there was meant to be a serious point underlying it.

APIL’s opposition to the Jackson proposals to end recoverability of success fees can be seen from APIL’s president Muiris Lyons comment:

“How can it be fair and just for someone who is suffering because of another person’s negligence to have to pay towards putting things right?”

This question, and the issue of recoverable success fees, of course begs the following questions:

“How can it be fair and just for someone who is not suffering because of another person’s negligence to have their costs of pursing a misconceived claim paid for by another party?”

and

“How can it be fair and just for someone (Party A) who has caused suffering to Party B to be forced to pay to towards the legal costs of Party C who has suffered an injury but as a result of an accident unconnected with Party A’s actions and incurred in the process of a failed claim against Party D?”

Traditionally, legal claims were paid for privately. If a party was able to persuade the other side or the court they had a good claim then their legal costs were paid for by the negligent party. If a party failed in their claim, they paid their own costs (and those of the party they had “wrongly” pursued).

Legal aid transferred the costs of the “bad” claim from the individual who brought the “bad” claim onto the tax payer. Or, arguably, enabled some “good” and “bad” claims to be brought that might not otherwise have been brought at all.

The previous Government’s decision to introduce recoverable success fees transferred the costs of “bad” claims from the tax payer or the individual (often regardless of the ability of the individual to fund the claim privately) onto negligent defendants. Party A, who has negligently injured Party B, has to pay the costs of Party B and also (via the success fee mechanism) the costs of Party C bringing a “bad” claim against Party D.

Recovery of success fees does not pay towards “putting things right” for a person who is suffering because of another person’s negligence. That is paid for by ordinary costs shifting. Instead it pays for the costs of bringing “bad” claims. Success fees pay for claimant lawyers bringing “bad” claims.

Any system other than straight private retainers is about producing a system whereby the cost of “bad” claims is shifted from the person making the “bad” claim elsewhere.

There may be very good reasons for this shifting of costs but the claimant lobby does no favours for itself by trying to paint this as being a simple black and white issue.

3 Comments

The previous Governments and powers that be decided to place the emphasis of funding Litigation, for those involved directly in litigation forums i.e. Insurers and Solicitors.
It meant solicitors were obliged to adopt the risk of runnning a claim, without getting paid. This led to them “policing” claims with little or no merit out of the system – a far cry from the old legal aid system.
The success fee (and the risk factors upon which it is based) remunerate the solicitor in the cases that are lost, often through no fault of theirs e.g. a witness doesnt come up to scratch, or a report is unexpectedly bad, or a Trial Judge simply finds for a Defendant.
To balance out the potential charge to the client caused by the success fee however, the Government then allowed the success fee to be paid for by the Insurers – why should an injured party, have to shell out for any legal fees to have the right to sue someone whom has all the financial muscle of an Insurer behind it. The suggestion in this blog of private retainers, is to allow Insurers to use that muscle to “out cash” a claim to defeat it
The suggestion claimant lawyers bring bad claims using cfa’s, is as accurate as saying Insurers dont maintain bad arguments thus massively escalating the very costs they then complain of

on one had the cry is of cherry picking only near certain cases and then the other hand says that the CFA sytem allows for claimants to run worthless claims knowing that the other winners will finance them

There was a shift from legal aid that was welcomed. Less burden on the state (us tax payers) and under the CFA the insurer were paying out the CFA uplift. So in reality we were/are still paying the solicitors fees, but out of our insurance premium payments instead of tax. Generally, people accept this sort of thing.

Then we have the beast that is the NHS. This suffers from the same bad press as legal aid. We pay taxes and people have to suffer poor NHS care, because big naughty solicitors keep taking all our tax money to line their own pockets. Sounds a bit cyclic. How can the NHS improve if the money keeps getting taken away?

The fact of the matter is if NHS staff were paid a little more and they were purely indemnified by the like of MDU and MPS no one would care. Not even the indemnity organisations, because they would have more members.

The press leech on to the ‘our hard earned taxes’ rhetoric as that is the only way that the story can be written anti-reform. As I have said before, if people were actually told that their premium might go down by £5 a month but if they have an accident then they will have to make do with 75% of their damages I think (of course I might be wrong) there would be a very different reaction (i.e. some reaction) to the Jackson reforms.

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Should probably add that i’ve never had a bad experience with the NHS and that I am a strong believer that certain successful claims (eg these suing school because of sports day ‘minor’ accident type claims)should never have been approved by the courts. People need to take care of themselves, but maybe not as far as attempting complex surgery on ones self (especially when the experts get it wrong now and then).